Devon Biondi | VP, Strategy Services
January 08, 2013

Room 77 and Expedia Take APIs into 2013 and Beyond

 

2013 looks like it’s going to be a good year for APIs. Beyond Google, Facebook and Twitter, companies in the travel industry are beginning to recognize the benefits of conducting business via APIs.

Last week, Room 77, a hotel booking startup, provided yet more proof that API-based collaboration can generate massive and mutually beneficial ROIs.

Room 77 recently received $30 million from investors like travel giant Expedia.com, which provides the startup with an API that powers specialized search options for hotel rooms.

For example, Room 77 lets discerning travelers choose rooms according to bed type, elevator proximity or square footage. It also provides a Google Earth-powered virtual “Room View” so people can double check the ambiance before making a purchase.

Room 77 reports selling hundreds of thousands of rooms since last April, an achievement largely thanks to Expedia’s decision to embrace web-based APIs. Without this decision, Room 77 would have attracted fewer customers to book hotels through Expedia.

Nearly two years ago, Expedia’s Affiliate Network (EAN) enlisted Mashery to manage its in-house API. This choice revolutionized the company’s identity, turning it from a standard travel website into a technology platform that now supports 5,000 developers and counting.

With Mashery’s assistance, EAN began delivering portions of its API to partners like Room 77 so they could leverage Expedia’s search tools, photos and consumer reviews. This piecemeal strategy successfully attracted 40% more developers each year, besides generating $1.5 billion in API-related revenue.

In fact, 90% of EAN’s business now depends on APIs, as the affiliate’s brand and marketing director John Watton remarked last year.   

Expedia’s recent investment in Room 77 suggests its API-based approach is not only here to stay but also likely to grow.  

“We believe metasearch is an increasingly important model and complementary to our travel transaction businesses,” affirmed Expedia CEO Dara Khosrowshahi. “The level of innovation and depth of content at Room 77 excites us about its future role in this important customer acquisition channel.”

In other words, Room 77 probably won’t be the last API-based company to draw Expedia’s interest.

Gogobot, a social trip-planning site that uses EAN’s API, has raised $19 million to date and boasts investments from Google’s Eric Schmidt and Square’s Keith Rabois, among other Silicon Valley stars.

If Gogobot’s model takes off, Expedia will certainly see increased profits and customer increases that would never have materialized without EAN’s decision to focus on APIs.

Expedia and Room 77’s collaboration suggests APIs are now absolutely indispensible for spawning ecosystems from products and turning businesses into platforms. And since this trend shows no sign of slowing down, APIs will likely become even more vital as the year progresses.